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evolovik26 · Posted: Mon Dec 03, 2007 7:18 pm Post subject:

i love it great
like i said in my original post this whole thing is just a tax on mathematically challenged.
and it is something you can do on your own so long as you are responsible and passed highschool math.
Unfortunately not many people nowadays have the ability or discipline to see this through.
Oh and as usual i agree with Eric

livinginnky · Posted: Tue Dec 04, 2007 9:10 am Post subject:

Thanks Eugene,

I usually wouldn't devote so much time to something as worthless as this, but I do think it is important to stop problems like this. I am all about making money and the ways of capitalism, but come on. I know it is legal to sell ice to eskimos but would I do it? That is something that each and every one of us has to decide on our own. It is not illegal to rip someone off but that fact doesn't make it right.

So decide for yourself if you are one who walks on the path of truth or one who simply lives for themselves and refused to either see or acknowledge the truth.

scraig · Joined: 27 Nov 2007 Posts: 7 5.85 Dollars($)

Missing interest questions.

I apologize I did not go through how the billing works and I was misunderstanding what you were asking until I re-read it today. The account will add up interest for the previous month and notice (bill) the customer of the interest charge on the 10th. On the 25th the interest is added to the account.

For the excel sheet, we started the discussion on the math with this scenario. $100,000 balance, $10,000 net income, and $7000 to cover all bills (includes the mortgage). On the excel sheet you will see the 25th has a charge for $650, though this is more than the calculated interest, it holds true to the original scenario. $7000 spent through the course of the month. The excel sheet math is still fine.

Moving to your questions of Pre payment penalty.
The guidelines mention a PPP for each state, however this is marked as currently waived and I have not heard anything about putting this into effect. Considering what the loan is, I would not think that it would ever be put into play.

Why the simulator is showing you 3.2 years.

There are really 5 reasons why the simulator varies on its results.

Index rate, when you select stable interest rates, it takes the index at 1% over it historical average.

Increasing rate scenario, it makes the index jump to the highest it has been 9.5% in one year. And drops it to 8.5% or 9% for the rest of the scenario (I am not 100% sure if it is 8.5 or 9%).

Income is added at the end of the month.

Expenses are added at the beginning of the month.

The simulator has to take many things into account to do the forecast, one thing (and I am realizing why) they did not want to get into was the float of money. This is where I had to predict a customer’s spending habits throughout the month to get a daily calculation of interest.

The simulator requires some training due to the hyperlinks throughout the program.

I ran the scenario through it a few different ways and I did not come up with your 3.2 years. My result varied from 2.5 years to 3.7 years on the simulator. I tried it with and IO payment instead of a fixed 30 year. I tried it with varying savings rates (even forced it to 30%) and I tried it with default margin.

For it to predict our scenario; located at .www.homeownershipaccelerator.com

1st page entry, the excel sheet has the scenario as 10,000 once a month.

2nd page entry, I put the scenario in as such $300000pv, 100000bal, 6.5 rate, with either payment (io or fixed)

3rd page entry, you can select the 25%, or hit the manual link (plus sign at bottom of first column) and make it say monthly $3000 (to be true to the scenario at hand).

4th page, select stable interest rates, 30 year scenario, But hit the “interest rate details” at the bottom of the box. Here you will select the margin. For our scenario margin would be rate- index (6.5%-5.225%= 1.2 Cool

. Make sure you also change the interest rate of the 30 year to 6.5 here.

5th page results=@ 25% saving rate, 2.9 years, interest paid $9542
Our scenario= @$3000(manually entered), 2.6 years, interest paid $8288

Why is interest different from the excel sheet? Did not take into account the float of money we have with the excel sheet, and other items I mentioned earlier that cause it to be conservative.

[Link deactivated as per forum rules]

livinginnky · Posted: Tue Dec 04, 2007 12:33 pm Post subject:

Round and round and round we go.

Let me show you the first 2 months and then around the 20th payment and then the 30th payment and finish this once and for all.

And for all those still keeping up we are both using 6.5% rates which according to the CMG website will be slightly higher around 7.5% so even now these examples technically aren't accurate.

You provided your own numbers so try to prove this wrong.

Your example. using $3000 extra available income
Balance owed at end of 2nd month = $94,000
Balance owed at end of 20th month = $40,000
Balance owed at end of 30th month = $10,000

My example. using $2910 extra available income
Balance owed at end of 2nd month = $93,982.94
Balance owed at end of 20th month = $36,801.32
Balance owed at end of 30th month = $ 2,547.35

I used your example spreadsheet and I used Calyx Point software to ammortize my example.

There is no disputing that once these companies show their numbers they are consistently proven wrong. This is also why it is so hard to get one of them to show numbers.

If anyone is interested I could post both ammortization schedules for accuracy checking.

livinginnky · Posted: Tue Dec 04, 2007 12:49 pm Post subject:

To be fair, and since nobody else except the moderators can view scraig's attachement, I have sent a PM to the admins asking them to activate it. Keep checking back as I am sure they will. The excel spreadsheet we are referring to is earlier in the thread. An ammortization schedule can be viewed below

Prepayment Calculator

Your Monthly Payment (excl. Tax & Insur.) is $ 632.07

Since Your First Payment was in 1 / 2008 , You have made 0 payments so your balance (12 / 2007 ) has changed from $ 100,000.00 to $ 100,000.00

Starting with $ 100,000.00 at 6.5 % and a payment of $ 632.07

Paying an extra $ 2,910.00 a month ($ 3,542.07/month total) means: Month (Year) Balance Payment Interest Paid Principal
1 0.08 96,999.60 3,542.07 541.67 3,000.40
2 0.17 93,982.94 3,542.07 525.41 3,016.66
3 0.25 90,949.95 3,542.07 509.07 3,033.00
4 0.33 87,900.52 3,542.07 492.65 3,049.42
5 0.42 84,834.58 3,542.07 476.13 3,065.94
6 0.50 81,752.03 3,542.07 459.52 3,082.55
7 0.58 78,652.78 3,542.07 442.82 3,099.25
8 0.67 75,536.75 3,542.07 426.04 3,116.03
9 0.75 72,403.84 3,542.07 409.16 3,132.91
10 0.83 69,253.95 3,542.07 392.19 3,149.88
11 0.92 66,087.01 3,542.07 375.13 3,166.94
12 1.00 62,902.91 3,542.07 357.97 3,184.10
13 1.08 59,701.56 3,542.07 340.72 3,201.35
14 1.17 56,482.88 3,542.07 323.38 3,218.69
15 1.25 53,246.76 3,542.07 305.95 3,236.12
16 1.33 49,993.11 3,542.07 288.42 3,253.65
17 1.42 46,721.83 3,542.07 270.80 3,271.27
18 1.50 43,432.84 3,542.07 253.08 3,288.99
19 1.58 40,126.03 3,542.07 235.26 3,306.81
20 1.67 36,801.31 3,542.07 217.35 3,324.72
21 1.75 33,458.58 3,542.07 199.34 3,342.73
22 1.83 30,097.74 3,542.07 181.23 3,360.84
23 1.92 26,718.70 3,542.07 163.03 3,379.04
24 2.00 23,321.36 3,542.07 144.73 3,397.34
25 2.08 19,905.61 3,542.07 126.32 3,415.75
26 2.17 16,471.37 3,542.07 107.82 3,434.25
27 2.25 13,018.52 3,542.07 89.22 3,452.85
28 2.33 9,546.96 3,542.07 70.52 3,471.55
29 2.42 6,056.61 3,542.07 51.71 3,490.36
30 2.50 2,547.34 3,542.07 32.81 3,509.26
31 2.58 -980.93 3,542.07 13.80 3,528.27

So your loan will terminate in 31 months ( 2.58 years).

p.s. notice I am not putting quit as much money into the pot every month and at the end of the 31 month the bank actually owes us $1,000.

So once your spreadsheet is working everyone will be able to see the truth.

scraig, I am going to tell you what I tell the others... hopefully you are simply misinformed and not selling this product knowingly... either way thanks for the opportunity and I hope you get something out of this.

livinginnky · Posted: Tue Dec 04, 2007 12:59 pm Post subject:

evolovik26 · Posted: Wed Dec 05, 2007 8:19 am Post subject:

Look the bottom line is this product is good for thouse people who make alot of money but have no money management skills. There are alot of thouse people out there. This program forces you to payoff your mortgage sooner. And thats great. But its not for everyone and its something everyone can do themselves if they can do math and have dicipline to put money away. The program doesnt do anything to speed up the process itself. Its sold on the same principle the option arms were sold last 5 years ( look at all the money you will be saving!!!). Its great for people who know what they doing and a disaster waiting to happen for thouse who cant controll their money.

livinginnky · Posted: Wed Dec 05, 2007 10:41 am Post subject:

Yes Eugene, but did you check my math? It shows that with the companies scenario we are using, after 31 months you will be down $10,000 with this program. That is with 10k in income and 3k in disposable used for the prepayments. And after 31 months regular prepayment saves $10,000. That is $322 per month for a money manager... most banks will set up automatic bill pay.... which is what you have to do with most of these programs anyway.

I also want to point out something that was simply brushed over. There public guidelines show... and are very specific... if you pay more than 20% prepaid per year there is a penalty of the state maximum allowed. So if you use our example in KY where I am I would have to pay 6 months interest as a penalty for paying it off in 31 months. This user "scraig" said conveniently that "The guidelines mention a PPP for each state, however this is marked as currently waived and I have not heard anything about putting this into effect. Considering what the loan is, I would not think that it would ever be put into play." OK- it is in the guideline we all see but scraig says it is not being used. Eugene, you know what they say about get it in writing?

evolovik26 · Posted: Fri Dec 07, 2007 5:14 pm Post subject:

oh I completely agree with you Eric even though scenario you guys are discussing is completely whacked. What i said is that if someone got extra money and no money management abilities then they can pay for this service.

Posted: Sat Dec 08, 2007 10:30 am Post subject:

I agree Eugene, I don't think this situation would actually happen. I just want to stick to 1 scenario and show how these programs don't save any money, they usually cost money. Doesn't matter what the scenario is, if it costs extra, then what is the point?

Guest

I got a guy bugging me NOW. For this as a Re-fi Home at 110,000.00
(Is this guy a rip off artest? Is this a scam?
You know they tell you the good points only.
My credit score is almost 900 and this loan sounds (strange)

Posted: Thu Feb 14, 2008 4:30 pm Post subject:

Jimmy,

Did you read the rest of the posts above? The good points are not true.

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.12 Dollars($)

There are pros and cons to this type of mortgage. The pro is that is does provide more flexibillity but the con is that is is an adjustable rate mortgage that will tend to be higher than a fixed rate mortgage. If you need the flexibilty then this may be a good option but not for most. Consider all the pros and cons before jumping into this type of mortgage.

Posted: Fri Feb 29, 2008 3:43 pm Post subject:

I find it funny that people need to be persuaded to see worth in any financial product. Any institution that is willing to lend hundreds of thousands of dollars to individuals is bound to want something in return.

In the case of the HOA from CMG, the borrower agrees to run his finances through GMAC in possibly the last loan they'll ever need. Funds from self-employment, annuities, rental properties, child care, 9-5 employment, bonuses and tax returns can all be set to work against the principal and interest-due. Also, when working the principal down, if home improvements are required, monies are now available without requiring a new secured loan. If college funds are needed, they are available from the home equity.

While some regard HOA products as 'smoke and mirrors', others use them as money management instruments -- and, until the home is sold, these folks may not need to ask for another loan. Maybe the detractors are afraid of losing future business, eh?

charlesarmbruster · Posted: Fri Feb 29, 2008 3:54 pm Post subject:

Right on! I don't think that 'PAY DAY LOANS' are righteous, either -- but, there they are, and tons of people need them.

Perhaps all financial advisors should be put out to pasture, too. And, maybe we should try to pay our taxes without withholding.

I notice that the HOA postor was scared away -- too bad. He was asked to provide numbers, and then he was castigated for doing so...maybe righteously, but he was still castigated.

I like this forum. Let's continue to review the new products that are surfacing now and in the near future -- we live in interesting times, and I hope all of us survive to help homebuyers take care of business and homeowners correct their financing.

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